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In the finest tradition of the legal profession.

COMMONWEALTH COURT ADDRESSES “RETROACIVITY” OF WHITMOYER

On Behalf of | May 20, 2021 | Firm News, Workers’ Compensation

On March 10, 2021, the Commonwealth Court of Pennsylvania decided the case of Beaver Valley Slag, Inc. v. Marchionda (WCAB), No. 867 C.D. 2020, which effectively held that a previously executed Third Party Settlement Agreement (TPSA) could be modified to disallow subrogation against work-related medical treatment expense.  This case is an interpretation of the Supreme Court’s Opinion in the case of Whitmoyer v. WCAB (Mountain County Meats), 186 A.3d 947 (Pa. 2018), which prevents subrogation against future medical treatment expense.

The Beaver Valley Slag case involved an individual (Marchionda) who suffered a serious work injury which rendered him incapacitated.  A products liability case against the seller of a stone crusher machine was settled for over $10 million.  The medical and indemnity subrogation interests of Beaver Valley Slag (employer) were satisfied through the settlement date which was some point in time prior to the Whitmoyer opinion being issued on June 19, 2018.

In the TPSA, a subrogation interest remained in the amount of nearly $9 million for which a 33.7% reimbursement rate was agreed to for future indemnity benefits and medical expenses.  This TPSA (with funding into a trust as part of the settlement) was approved by common pleas court and there were no appeals.

Just two months after Whitmoyer was decided, the Guardian for the Estate of Jason Marchionda (Guardian) filed a Review Petition seeking to recover all the medical benefits it paid as well as relief from the obligation to pay any future medical benefits.

Following litigation, the WCJ ordered employer to reimburse Guardian for any medical benefits paid after the date of the Whitmoyer decision of 6/19/2018 and also pay 100% of future medical expense incurred by the claimant.  Relief was not granted back to the date the TPSA was signed.  The WCAB affirmed and both parties appealed to Commonwealth Court.

In a very detailed and careful opinion, the Commonwealth Court affirmed the WCAB in all respects.  Much of the opinion was devoted to whether application of the Whitmoyer opinion was to be deemed “retroactive” to cases where, such as this one, an unchallenged agreement was in place between the parties involving a reduced reimbursement for medical treatment expense.  The court seemed to conclude that Whitmoyer was not technically being applied retroactively as there was an open agreement between the parties which could be modified or challenged under Section 413(a) of the Workers’ Compensation Act for being incorrect in a material respect.

It was further reasoned that because Section 319 had not previously been addressed by the Supreme Court to the extent of future subrogation interests involving medical expense, the court was not pronouncing a “new rule” or interpretation of the statute.  Instead, the result in Whitmoyer was deemed foreseeable and would obviously be applicable to cases which remained pending and challenged this particular issue.  The Guardian here raised the issues essentially as soon as it was able to do so following Whitmoyer by filing its Petition a few months later in August, 2018.  The TPSA was modified as of the issuance date of the Whitmoyer opinion which was also the earliest date the Guardian could file his challenge and obtain relief.

Employer raised issues concerning waiver, res judicata and collateral estoppel based on the Guardian’s voluntary signing of the agreement and failure to file an appeal from the approval of the TPSA.  However, the court rejected all these arguments, noting that the claimant was simply relying upon a  “boilerplate” form promulgated by the Workers’ Compensation Bureau to document third party settlement distribution.  Likewise, the proceeding approving the TPSA did not provide the opportunity to fully litigate the issues to a final adjudication on the merits.

The end result of the all the above is that employer was directed to reimburse the Guardian for all the portions of the payments of medical expense it had made following the Supreme Court’s Opinion in Whitmoyer on 6/19/2018.  All medical treatment expense into the future would be solely the employer’s responsibility.

Practice Pointer:  Petitions filed to challenge an insurer’s right to subrogation against ongoing medical treatment expense can have merit.  If not already addressed following Whitmoyer in 2018, Beaver Valley Slag holds that an existing TPSA can be modified as early as 6/19/2018 to deny subrogation against future medical expense.